Gift Cards - The talking point in Organized Retail

Retailers in India have already started the concept of co-branded credit cards. A current example would be the aggressive salesperson in any Spencer’s store showcasing the HSBC-Spencer’s offering.

Another vivid example would be the Future Group credit card which had TV ads across channels for quite some time. The response though had been lukewarm.

With organized retail sales looking downward over the last year, especially in Q3 and Q4 of 2008-09, these offering had disappeared from the table. But, Q1 & Q2 of 2009-10 have been particularly good, with around 15% growth in the sector on the back of a successful festive season.

The new buzz word that is coming up in Retail circles is the Gift card, which is basically gift vouchers/certificates in the form of smart cards.

They will be profitable for retailers as it will breed loyalty through repeat purchases. There will also be a significant portion of card value (10% in America: Economist) which are never redeemed.

Retailers in India are still nascent when it comes to maintaining a comprehensive customer database, and this will be a small, yet significant step towards the same.

The future for gift cards will yield many innovatively packaged offerings similar to the trends in America.

A few examples from the Economist:

1) Target: Gift cards that double as wind-up toys

2) Gift cards through email

3) Best Buy: multiple people can contribute small amounts for an expensive gift card to be created

4) Time based gift cards during the day. E.g. Happy hour shopping times for Gift card redeemers

Expiry dates in gift cards will foster consumers to buy within a specified period and this will always help the retailer waiting on the other end. If not redeemed this goes directly into the company’s kitty. But a lot depends on how the retailer will handle consumers who arrive at their store with expired gift cards. A balanced act will go a long way in establishing the customer friendly side of a retailer.

Another interesting trend in America would be the auctioning of such gift cards online. E-bay is estimated to sell 100,000 gift cards every month through the second-hand route. Consumers give up gift cards that they are unable to redeem online at almost half their price.

All this leads to a overall healthy trend for the gift card concept.

Manufacturers are already present in India for smart cards, who are currently in advanced talks with retail biggies.

The advantage for consumers is pretty obvious; a gift card would be the ideal choice for any wedding, birthday and other such occasions.

Volkswagen 'Road-block' for India

“German Engineering, Made for India”
An entire Times of India edition blanketed with only Volkswagen, over and over again as each page was turned on by surprised readers & confused marketers. Confused & in awe only because of the gravity of the money that had been spent for the day, 11th November 2009.

This is the kick start of a 40 crore campaign by Volkswagen India, who have also come up with a Television ad recently, showcasing their brands.

The print ads introduced and appraised readers to the various Volkswagen brands that are currently available (Passat & Jetta) & the ones that are lined up for India (Polo, Beetle, Touareg).

Each brand of Volkswagen caters to a different target group, and the company is hoping that the 40 cr. media spend will help establish all its brands; they certainly got people talking for almost a week now.

The media spend will include print, TV, outdoor & the internet.

Expect the internet & outdoor impact to be similarly innovative-Mudra Group


The 40 cr. question?
is whether this will boost their numbers, which were poor in Oct' 2009. They operate in the very niche top end of the business, which accounts for less than 2% of overall car industry sales. India is touted as one of the growth markets for Volkswagen and they are not that far behind Mercedes or BMW in their numbers. Apr to Oct sales show that they are only around 700-900 cars behind.

The main question is the relevance of such a blitzkrieg campaign in a daily known for being friendly (readers may spell irritating) to full page print advertising. Is this the best channel for a niche top end brand like Volkswagen? Would it do any good if the word-of-mouth continued in the lower floor circles of an office?

Brand building, definitely yes! & a good job at it too, but at what cost, is the 40 cr. question. Meanwhile entertainment galore for readers & marketers alike, let’s hope the numbers look up, while people look forward to the Beetle & Polo hitting the hard Indian roads.